Opinions
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Tax Breaks & Subsidies
On April 25, The Hays Daily News ran a fairly extensive news story on the proposed development of the industrial wind power generation plant west and southwest of Hays. That article stated that about 80 local families have expressed their opposition so far, but it did not say much about why there is this opposition.
Let me try to explain very briefly some of the multiple sources of opposition. But please understand that this is an extremely brief explanation of each. More information is available at a public meeting being held tonight in the Fox Pavilion, starting at 7 p.m. and sponsored by the Ellis County Environmental Awareness Coalition. (Full disclosure: I am a member of this group.)
I would say that the opposition can be divided into three groups, and these groups often overlap.
Do Carbon Emissions Credits really help reduce pollution?
April, 2007 in Wabash Valley Journal of Business
April, 2007 in Wabash Valley Journal of Business
Whether it is called "emissions trading", carbon credits, or cap and trade, the practice amounts to buying and selling the right to pollute. It is an administrative solution to pollution and doesn't, in the final analysis, prevent pollution at all.
So I'm afraid wind turbines on the Assynt Foundation land will do three things: destroy the iconic scenery, destroy the environment and divide the community.
The one thing they might do in addition is make (subsidy) money, which is what all wind farm developers really want.
Don't come up with the lame excuse of global warming. Say it straight. It's the money.
With arbitrary enactment of the Shumlin tax, Vermont would send a negative message out to all businesses considering expansion or relocation to the state, while jeopardizing the amount of no emission carbon power it receives, at attractive prices. This would be both unfortunate, unnecessary, and clearly not the Vermont way. Shumlin should end the shakedown of Vermont Yankee now.
Jan Falstad said that wind had gone from being "technologically challenged and too expensive - to being a popular and mandated goal." Perhaps more accurately, it should have read, "Wind has gone from being technically challenged and too expensive - to being technically challenged, mandated and taxpayer subsidized."
Suppose that a friend of yours is trying to lose weight, and he tells you, "If I eat this salad, it will be good for me. So then I can have cake for dessert." What would you tell your friend?
Al Gore is trying to say that by investing in alternative forms of energy, he is "offsetting" the heavy use of conventional electricity for his home. This is like saying that eating salad entitles a dieter to enjoy cake for dessert.
Now, here's where profit pushes its ugly snout into the trough ahead of the needs of the environment: to encourage renewable energy generation, the Government (using our money) pays the generator a guaranteed subsidy, currently around £35 per megawatt hour (MWh).
With the scramble among suppliers to buy these ROCs to fulfil their obligation, the most recent price at auction - yes, there's even an eBay-style auction site selling packets of renewable power - was a whopping £46. Now, given that the wholesale price of all electricity is currently about £45, that plus the subsidy doubles the value of wind electricity to more than £90 per MWh.
Given that sort of return, those generator boys are - if you'll pardon the expression - cooking with gas.
After all, at that price the sort of 120m high mast mooted for dozens of Northumberland sites currently seeking planning permission is calculated to be worth £400,000 a year per turbine to the generating company.
Perhaps something more practical than the prospect of quick and plentiful profits should be proffered before we kiss goodbye to the most beautiful landscape in England?
So why, apart from the well-intentioned New York state legislators, who want renewable energy but don't understand the costs and inefficiencies, should the beautiful Catskills await the new industrial rapists? The claim of new jobs doesn't stand any scrutiny, since teams of contractors will be brought into the area and taken out again after the turbines have gone up.
No, the real reason that Goldman Sachs and other big mecantile financiers are backing the giant windmills are good old-fashioned tax breaks. The US government permits a triple depreciation for tax purposes on wind turbines, and those with enough capital can invest in tax shelters that use these depreciations to remove the tax on profits for other ventures.
In the words of one Catskills campaigner: "If I had the ability to invest $1 million in a wind farm, I could avoid paying taxes on another $2 million in profits from some other venture. Yup, that would save me half a million in taxes. Hmmmmm".
Maybe, when it comes to some of the solutions offered by well-intentioned environmentalists, it would be wise to examine the motivation of some of the lobbyists who profess to support them. It's still not too late for the Catskill Mountains.
We cannot avoid the fact that some people will suffer from the wind farm projects, but we can ensure that the wind farm companies adequately compensate the damaged individuals for their losses. No reason exists that a farmer who happens to own the specific property on which the company will place its turbines will earn hundreds of thousands of dollars of revenue from the project, while a simple family with a small home adjacent to the wind farm will lose tens of thousands of dollars of property value from the same project. County officials can and should insist that corporations obtaining permits for wind farms agree to a legal process whereby individuals whose property values are damaged will be compensated for this loss.
Many Americans, including the majority of conservative Central Illinoisans, reacted with anger when the Supreme Court ruled that a city could take an individual’s home and give the land to a private developer. But at least in that case, the homeowners were receiving compensation for the taking. The wind farm situation, where no compensation for damaged homeowners is offered, presents a far worse scenario. We need not, and must not, tolerate it.
Wind is the least cost effective way to produce power. But all the tax credits make if very profitable. That is the only reason to build wind plants. A project like Redington Black Nubble would mean about $20 million in tax credits over the 10-year period allowed by the production tax legislation. That's not counting what they sell the power for. It's all about the money. It isn't some environmental company here to save us. As far as the Land Use Regulation Commission's denial of the Redington Project, the project did not meet the standards and laws. It's that simple.
And we better watch out. If it sounds too good to be true, it probably is.
Keep our mountains protected.
The Best Policy on Subsidies Is to Simply Ditch Them
January 29, 2007 in American Enterprise Institute
January 29, 2007 in American Enterprise Institute
Only in the government does it make sense to fix one bad idea--the subsidising of fossil-fuel energy--by giving even larger subsidies to less efficient forms of energy such as ethanol and wind power. Only in government can you find the kind of hypocrisy shown by Nancy Pelosi, speaker of the US House of Representatives, and the new Democratic Congress, which gave a whopping $14bn subsidy to the “alternative energy” industry in their “first 100 hours” but would have screamed had Republicans given the same to oil companies. And only in government do you see a Republican oilman from Texas declare that he would rather run cars on corn from Iowa, doubling the huge subsidy that ethanol producers suck out of taxpayer wallets.
The right thing to do is to strike all energy subsidies, tax the environmental harms that energy demonstrably creates and let the market sort it out.
The right thing to do is to strike all energy subsidies, tax the environmental harms that energy demonstrably creates and let the market sort it out.
Facts now demonstrate that much of the information about wind energy distributed by the wind industry and its advocates simply isn't correct. The public, media and government officials have been misled. Accepting the misinformation and adopting policies based on it isn't in the best interest of electric customers, taxpayers, or the environment – even though “wind farms” are highly profitable for organizations that enjoy the huge tax breaks and subsidies. Income for landowners who lease land for turbines is often at the expense of their neighbors........Please keep in mind that electricity generated from wind has less real value than electricity generated from reliable (“dispatchable”) generating units that can be counted on to be produce electricity when it is needed to serve customers demand. (Electricity from wind is intermittent, volatile and unreliable and most likely to be available at times when it is not needed to meet high electricity demand.) If electricity generated in Kansas from wind energy were to bear anything near its true cost (and considering transmission costs discussed below) there is no realistic basis to believe that it would be competitive with electricity from reliable generating units located near population centers.
The problem of carbon emissions and global warming is finally and rightly emerging as a major public concern. However, it remains to be seen whether public policy will move beyond wishful thinking and symbolic gesture to meaningful responses.
Although the proposed Renewable Portfolio Standard (RPS) legislation may seem like a step in the right direction, closer examination reveals that what little it may achieve in terms of benefit will be obtained at a disproportionately high cost.
Simply stated, the proposed RPS legislation will not seriously reduce demand for electricity generation by traditional sources, and it will drive industrial-scale wind energy development in some of our most highly valued, scenic, and ecologically sensitive areas — including our mountain ridges and the Chesapeake Bay.
Thus the capital cost per achieved megawatt hour of windpower is more than three times that of conventional generation!
This fact makes wind uneconomic and no one would build windfarms unless an unprecedentedly large subsidy were available as the CEO of E.ON UK has pointed out. The subsidy is provided by the Renewables Obligation, its market increment and the exemption of renewables from the Climate Change Levy tax.
As a result we are paying a fortune for a very small saving of CO2-emission which is why the House of Commons Public Accounts Committee has said that "The Renewables Obligation is currently at least four times more expensive than the other means of reducing carbon dioxide currently used in the United Kingdom......" (2005 report on Department of Trade and Industry: Renewable energy).
There is a further crucial problem. Windpower generation is not an 'all or nothing' 30% but varies continuously and unpredictably. Our German cousins, with a far greater windpower percentage than the UK have already warned of the grid control problems this will cause.
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Energy Policy]
Toynbee considers the Renewable Energy Foundation "an anti-wind outfit". We are not. We have consistently argued for offshore wind, among other technologies, to be made more attractive, and for a secure role for the renewables sector. Renewables have much to offer in tackling our energy crisis, but undiscerning enthusiasm, and an unwillingness to recognise the problems arising from a defective subsidy system, won't help anyone.
Two letters referred to a visit by councillors to see Al Gore's film An Inconvenient Truth (Gazette, December 7 and 14).
Is it not also an inconvenient truth that the Renewable Obligation Certificates (ROCs) have never been fully explained to the public, who pay for them?
The real message of the REF reports, however, is, first, that wind is so unreliable that we would have to build up to a dozen new conventional power stations just to provide backup for all the intended turbines when the wind is not blowing; and, second, that the more we depend on the unpredictable wind, the more this will destabilise the grid, threatening its breakdown.
This was confirmed by another recent report, from UCTE, Europe’s principal grid authority, on the power failure that blacked out much of western Europe on November 4. A significant factor in that collapse of the grid was the growing difficulty of accommodating Germany’s dependence on 18,000 turbines for 6 per cent of its power.
Jordanville Wind Project Gets 80 Percent Tax Cut, But Provides Only 6-12 Permanent Local Jobs
December 15, 2006 in The Freeman's Journal
December 15, 2006 in The Freeman's Journal
Wind Project are two megawatt turbines, the taxation rate will be $16,000 per turbine.
The county’s consultant determined that the full taxation rate per turbine would be $40,000 per megawatt. Therefore, the county’s offer represents an 80 percent tax exemption.
This rate of exemption will apply to all wind projects in Herkimer County.
The Jordanville Wind project will bring “six to 12 jobs” to the county, according to the Jordanville Wind Project Draft Environmental Impact Statement.
By comparison, Wal-Mart brought over 200 jobs and generates over $1 million a year in sales-tax revenues at its distribution center in Schoharie County, which employs many Herkimer County residents.
Senators Urge President Bush to Extend Production Tax Credit
December 15, 2006 in U.S. Senate Committee On Energy and Natural Resources
December 15, 2006 in U.S. Senate Committee On Energy and Natural Resources
The senators, in their letter, noted that a five-year extension would likely lead to a surge in the construction of new renewable energy projects. This will help the nation in two important ways. First, the new projects would reduce America’s heavy reliance on natural gas, taking some of the pressure off natural gas prices. Second, the tax credits would provide employment in states with renewable resources as well as states where renewable energy generation equipment is manufactured.
As we said, it is not unreasonable to assume that the United States can overcome these technological hurdles. But that doesn’t make them any less considerable. Nor should we forget that the federal government has been subsidizing the renewable energy industry for decades with very little to show for it. “25-by-’25″ is a noble idea, but one which also still needs some careful consideration.
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